MANILA, Philippines — President Rodrigo Duterte has vetoed a provision in the recently-signed sin tax bill, requiring authorities to secure court orders before conducting investigations or raids against suspected entities that distribute illicit alcohol and e-cigarette products.
Duterte signed Wednesday Republic Act 11467, which imposes additional excise taxes on alcoholic beverages and e-cigarettes starting January 2020.
However, Duterte used his line veto power against Section 5 of the ratified sin tax bill, his spokesman Salvador Panelo confirmed in a Palace press briefing.
President Duterte vetoes Sec. 5 of the Sin Tax Reform Law which prohibits search and seizure by BIR without prior court order. Duterte said the restriction curtails the power of the State to collect taxes and restrains the enforcement power of the BIR. @inquirerdotnet pic.twitter.com/yy2pXwpO3v
— Darryl John Esguerra (@drrylesguerra) January 23, 2020
In his message to Congress, Duterte said he vetoed Section 5 as it “effectively curtails the power of the State to collect taxes, and renders powerless the BIR (Bureau of Internal Revenue) to effectively implement enforcement mechanisms against illicit tobacco products.”
The President likewise pointed out that such restriction “does not exist with respect to any other taxable article.”
The veto was reportedly a recommendation of the Department of Finance, which flagged the provision as “unlawful.”
Aside from imposing additional sin taxes, the measure also includes a provision exempting medicines for heart disease, diabetes, and high cholesterol from value-added tax (VAT) starting January 2020.
Medicines for mental health, cancer, tuberculosis, and kidney diseases will also be VAT-free starting January 2023.